ONGC Share Price Target 2025: Earnings Below Expectation - Buy, Sell Or Hold?

Despite Oil and Natural Gas Corporation (ONGC) falling short of earnings expectations in the March quarter, Emkay Global has reiterated its ‘Buy’ recommendation on the stock, citing a stable operational outlook and an attractive dividend yield. However, it has trimmed its target price by nearly 10% to Rs 280, adjusting for lower crude oil price assumptions and recent earnings revisions.

The revised valuation is based on 8 times estimated consolidated earnings for March 2027, reflecting the brokerage's recalibrated outlook on global oil markets, with Brent now expected to average around USD 70 per barrel in the near term.

Emkay Global has also cut its earnings forecasts for ONGC by 11% for FY26 and 9% for FY27, aligning with revised price expectations and accounting for Q4 performance. Nonetheless, the firm maintains that the stock’s current valuation leaves ample upside potential, especially given its ~5% dividend yield and exposure to India’s long-term energy needs.

“We cut FY26E/27E SA EPS by 11%/9%, building in lower oil prices (USD70 Brent); cut TP by ~10% to Rs280 (8x Mar-27E consol target P/E). Dividend yield is ~5%; retain Buy,” Emkay said in its report

Also Read: Stocks to Watch Today: IndusInd Bank, ONGC, IndiGo, NTPC Green, TCS, And More In Focus | Republic World

Weak financials 

ONGC’s Q4 FY25 results were marred by an unexpected surge in exploration-related expenses. The company reported standalone EBITDA of Rs 139.6 billion and a net profit of Rs 64.5 billion, falling 16% and 18% below street estimates, respectively. The primary drag was a fourfold jump in dry well costs to Rs 41.7 billion, which overshadowed otherwise steady revenues and production volumes.

Despite the near-term pressure on margins, Emkay Global remain optimistic about ONGC’s growth prospects, underpinned by several upstream projects that are expected to boost output over the next two years. Key among them is the KG-DWN-98/2 development, which is projected to peak at 45,000 barrels of oil per day and 10 million standard cubic metres of gas per day. Additional gas contributions are also expected from the Daman and DSF blocks, each set to add 4–5 mmscmd by FY27.

Reduced capital expenditure 

Capital discipline appears to be improving as well. ONGC has guided for a reduced capital expenditure of Rs 300–350 billion in FY26, down from Rs 380 billion this year, reflecting both cost efficiencies and project maturity.

Business outlook

Risks to the outlook include fluctuations in commodity prices, policy interventions, operational delays, and exploration setbacks. Yet, Emkay Global believes ONGC’s project pipeline, improving efficiency, and strong cash flows justify its ‘Buy’ stance, even after the downward revision in price target.

Disclaimer: The views expressed in this article are purely informational, and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks, and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds.